Do You Have to Pay Back Your Premium Tax Credit?

On this page

• How the premium tax credit works
• Is there a limit on how much you pay back?
• An example
• What if your income ends up lower than expected?
• How to avoid a big bill at tax time
• What counts as income
• You still have to file Form 8962
• If you can’t pay what you owe
• Frequently asked questions

How the premium tax credit works

When you apply for a Marketplace plan, you estimate your household income for the coming year. The Marketplace uses that number to set your premium tax credit, and it usually sends the credit straight to your insurer each month to lower your bill. This monthly payment is called the advance premium tax credit, or APTC. For the basics, see what is a subsidy in health insurance.

The final number comes later. When you file your tax return, you use Form 1095-A from the Marketplace and IRS Form 8962 to compare the credit you received with the credit your actual income qualifies you for.

• If you got less than you qualify for, the difference is added to your refund or lowers what you owe.
• If you got more than you qualify for, you pay the extra back with your taxes.

Repayments are common. For tax year 2023, about 5.6 million returns paid back some advance credit, about $7.3 billion in all, even with repayment caps in place.

Is there a limit on how much you pay back?

It depends on the coverage year.

2025 coverage (tax returns filed in 2026)

For 2025, the amount you have to repay is capped if your household income is under 400% of the federal poverty level:

Household income (share of poverty level)	Single filers	All other filers
Under 200%	$375	$750
200% to under 300%	$975	$1,950
300% to under 400%	$1,625	$3,250
400% or more	No cap	No cap

Tax year 2025 uses the 2024 poverty guidelines: $15,060 for one person, so 400% was $60,240. For a family of four, 400% was $124,800.

2026 coverage and later

The 2025 federal tax and spending law, often called the One Big Beautiful Bill Act, removed the caps for tax years after 2025. The IRS has confirmed there is no repayment cap starting with the 2026 tax year. So for 2026 coverage, which you’ll reconcile when you file in early 2027, you pay back the full difference, whatever your income.

A second change makes this bigger. The extra-large tax credits that ran from 2021 through 2025 expired, so the old cutoff at 400% of the poverty level is back. For 2026 coverage, that’s $62,600 for one person and $128,600 for a family of four. If your final income goes over that line, you don’t qualify for any credit, and you repay everything you received during the year. For ways to keep your 2027 costs down, see how to lower your Marketplace premium.

An example

Say you’re 40, single, and pick a silver plan that costs $625 a month, the 2026 national average for the benchmark plan at that age. You estimate $30,000 of income, so your share of the premium is about $155 a month and your advance credit is about $470 a month, or $5,640 for the year.

Then you pick up extra work and finish the year at $45,000. At that income, your share of the premium is about $359 a month, so you only qualify for about $3,190 in credit for the year. You’d owe roughly $2,450 back.

Under the 2025 rules, a single filer at that income would have owed at most $975. For 2026 coverage, there’s no limit, so you’d owe the whole $2,450.

What if your income ends up lower than expected?

You’ll usually get money back. A lower income means a bigger credit, and the IRS pays you the difference when you file.

There’s one special case. If your income falls below 100% of the poverty level, you normally wouldn’t qualify for a credit at all. But if the Marketplace estimated at enrollment that your income would be between 100% and 400% of the poverty level, and you gave honest information, you can keep the credit you received. You don’t have to repay it just because your income came in low.

If your income drops enough that you might qualify for Medicaid, report the change so you can switch. See health insurance for low-income families.

How to avoid a big bill at tax time

• Report changes within 30 days. Tell the Marketplace when your income or household changes, like a raise, a new job, a marriage or a new baby. Your credit will be adjusted for the rest of the year.
• Update your estimate if your income moves around. If you’re self-employed or do gig work, start with your best honest estimate and revise it if you’re running ahead. See health insurance for the self-employed.
• Watch one-time income. Selling stock, taking money out of a traditional IRA or 401(k), or a lump-sum Social Security payment can push your income up. This catches a lot of early retirees; see can I get health insurance if I retire early.
• Take less of the credit upfront. You can use all, some or none of your credit each month. Taking less means a higher monthly premium but less risk at tax time, and anything you didn’t use comes back when you file.
• Set money aside. If you can see your income creeping up, put the difference in savings so the tax bill doesn’t hurt.

Guessing low on purpose doesn’t work either. You’ll repay the difference, and giving false information can lead to penalties. See what happens if you under-report your income.

What counts as income

The Marketplace uses modified adjusted gross income (MAGI). That’s your adjusted gross income plus any untaxed foreign income, non-taxable Social Security benefits and tax-exempt interest. It includes the income of everyone in your tax household who has to file a return.

Child support, gifts, Supplemental Security Income (SSI) and veterans’ disability payments don’t count. Alimony counts only for divorces finalized before 2019.

You still have to file Form 8962

If you got advance credits, you have to file a tax return with Form 8962, even if your income is low enough that you normally wouldn’t file. You’ll need Form 1095-A, which the Marketplace mails early in the year and posts in your online account. See do you have to show proof of health insurance when filing taxes.

Skipping Form 8962 can delay your refund and cost you future help. Under the 2025 law, starting with 2028 coverage, the Marketplace has to stop your advance credits if you don’t file and reconcile for even one year. Court orders have paused that penalty for 2026 and 2027 coverage, but the filing requirement hasn’t changed.

If you can’t pay what you owe

File on time anyway. The IRS offers a short-term payment plan of up to 180 days if you owe less than $100,000, and monthly installment plans if you owe $50,000 or less. Interest and penalties keep adding up until the balance is paid, so pay what you can.

Shopping for 2027 coverage? Compare plans and prices in your area.

Frequently asked questions

Do I have to pay back the premium tax credit if I made more money?

Usually, yes. If your final income is higher than your estimate, your credit shrinks and you repay the extra. For 2026 coverage and later, there’s no cap on the repayment.

What’s the repayment limit for 2025?

If your household income was under 400% of the poverty level, the most you’d repay for 2025 is $375 to $1,625 for single filers and $750 to $3,250 for other filers, depending on income.

What if my income goes over 400% of the poverty level?

For 2026 coverage, you can’t get a premium tax credit above 400% of the poverty level ($62,600 for one person). You’d repay all the advance credit you received.

Can I avoid repaying by not taking the credit in advance?

Yes. If you pay full price each month and claim the whole credit when you file, there’s nothing to repay. You can also take just part of the credit in advance.

This article is general information, not tax or legal advice. Your situation may differ, and a tax professional can help with your return. Last reviewed September 2026.